State’s Reserve Second in Region
by July 31, 2006 12:00 am 58 views
In the first quarter of 2006, Arkansas banks collectively had a loan-loss-reserve ratio of 1.44 percent, down from 1.53 percent for the same period in 2005.
Banks maintain a reserve adequate to absorb estimated credit losses associated with their loan and lease portfolios.
(Click here for a chart.)
The ratio is a percentage of a bank’s outstanding loans.
Therefore, on average, banks in Arkansas reserved 1.44 percent of outstanding loan value as a hedge against potential losses.
As of March 31, loan-loss ratios were 1.35 percent for Springdale-based Legacy National Bank; 1.06 percent at Little Rock’s Metropolitan National Bank; 1.64 percent at Jonesboro-based Liberty Bank of Arkansas; and 1.01 percent at Pinnacle Bank of Rogers.
The collective reserve ratio for the U.S. Federal Reserve Bank’s Eighth District, which includes all of Arkansas and parts of six other states, was 1.28 percent.
Arkansas ranked as the second highest in reserve for the district, 0.01 percent behind Indiana.